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37th PARLIAMENT, 3rd SESSION

Standing Committee on Finance


EVIDENCE

CONTENTS

Thursday, February 19, 2004




¿ 0935
V         The Chair (Mr. Roy Cullen (Etobicoke North, Lib.))
V         Mr. Pierre Paquette (Joliette, BQ)
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         Hon. John McKay (Parliamentary Secretary to the Minister of Finance)
V         The Chair
V         Mr. Derek Lee (Scarborough—Rouge River, Lib.)

¿ 0945
V         The Chair
V         Hon. John McKay
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         The Hon. Robert Thibault (West Nova, Lib.)
V         The Chair
V         Mr. Pierre Paquette
V         Hon. John McKay
V         Hon. John McKay
V         The Chair
V         Mr. Pierre Paquette
V         The Chair

¿ 0950
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         Mr. Derek Lee
V         The Chair
V         Mr. Derek Lee
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         The Hon. Robert Thibault

¿ 0955
V         The Chair
V         Mr. Pierre Paquette
V         The Chair
V         Hon. John McKay
V         Ms. Clare Scullion (Counsel, General Legal Services Division, Department of Finance)
V         The Chair
V         Mr. Pierre Paquette
V         The Chair

À 1000
V         The Chair










CANADA

Standing Committee on Finance


NUMBER 003 
l
3rd SESSION 
l
37th PARLIAMENT 

EVIDENCE

Thursday, February 19, 2004

[Recorded by Electronic Apparatus]

¿  +(0935)  

[English]

+

    The Chair (Mr. Roy Cullen (Etobicoke North, Lib.)): Ladies and gentlemen, we'll now start the meeting. The meeting is to consider Bill C-18 clause by clause.

    In advance of that, though, we do have a motion that was presented by Monsieur Paquette.

[Translation]

    Mr. Paquette, could you explain your motion, please?

+-

    Mr. Pierre Paquette (Joliette, BQ): Mr. Chairman, before speaking to the motion itself, I want to say that I deplore the fact that the committee was convened this morning. I had asked that we hear witnesses. Obviously with a 12-hour notice is impossible to have witnesses, especially witnesses who are prepared, to inform us on issues related to Bill C-18. I deplore this and I think it is a bad sign as to... There is no interpretation?

+-

    The Chair: Excuse me, there is no interpretation?

+-

    Mr. Pierre Paquette: I'm not the only one who was displeased; the interpreters did not come.

+-

    The Chair: You are going to have to repeat your compliments.

[English]

    We're going to suspend for five minutes while we find an interpreter.

¿  +-(0934)  


¿  +-(0940)  

[Translation]

+-

    The Chair: We are ready.

[English]

    We will consider Bill C-18 clause by clause, but first we have a motion that was presented by Mr. Paquette.

    Would you like to speak to your motion, please?

[Translation]

+-

    Mr. Pierre Paquette: Thank you, Mr. Chairman. Before submitting my motion I want to say that I would have preferred that we meet Monday afternoon as planned. That would have allowed us to hear witnesses. With 12 hours' notice it is impossible to call witnesses who might be prepared, or even available, for that matter. I repeat that I deplore this situation and I think it augurs very poorly as to the Prime Minister's express wish to fight the democratic deficit.

    To lessen the democratic deficit, there are two things in Bill C-18, two different things that must not be confused. On the one hand, the bill talks about extending the equalization formula for one year, and we do not agree with this. It also refers to the $2 billion promised by Mr. Chrétien and promised anew by Mr. Manley. We of course agree that this 2 billion-dollar payment should be made.

    I would like the bill to be split to allow us to vote democratically in favour of the points we are in agreement with, that is to say the payment of the $2 billion, and against the extension of the equalization formula, which we are not in favour of.

    My motion reads as follows:

That the Standing Committee on Finance request an order of the House authorizing the division of Bill C-18, an Act respecting equalization and authorizing the Minister of Finance to make certain payments related to health, so that any matter concerning the transfer of an additional $2 billion to the provinces as part of the Canada Health and Social Transfer can be dealt with in another bill.

    I move that the bill be divided into two.

[English]

+-

    The Chair: Thank you.

    Before I take questions, I just want to comment on what happened yesterday. We tried to accommodate your request to have witnesses, but given the urgency to deal with this legislation, the committee decided that we're going to have a session later on where the Bloc can present witnesses, and other witnesses, and we can talk and have a more fulsome discussion around equalization.

    So that was the compromise. I'm sorry we couldn't accommodate you fully.

+-

    Mr. Pierre Paquette: Was that a compromise?

+-

    The Chair: Mr. McKay.

+-

    Hon. John McKay (Parliamentary Secretary to the Minister of Finance): I also want to speak to it. I appreciate, for the interest of collegiality, that I am in fact, on behalf of the government, asking that the committee move this bill fairly smartly, but I hope that over the course of yesterday I did make the argument that there is a significant legislative imperative here.

    I appreciate that the provinces want this $2 billion. In fact, I think Quebec has already booked the money, as having received the money, as has Manitoba. I can stand to be corrected on that point, but there's just an expectation that this money will be flowing from the Government of Canada.

    On the equalization aspect of the bill, again, the legislative authority of the Government of Canada expires on March 31, and if we don't meet that legislative deadline, then money will cease to flow, because we'll have no authority to do so. This bill is not a substantive discussion of equalization, and I'm glad, Chair, that you suggested we have a more fulsome discussion of that.

    Possibly in light of the negotiations--or the discussions, at least--that are being carried on between the finance minister and the other ministers of finance this weekend we will have some more things to talk about, some really substantive issues, around the equalization theme.

    So I have a legislative imperative for both the $2-billion transfer and the equalization payment, and then I have a further legislative imperative with respect to how timelines work out here, given that I have a 72-hour window in which to report this bill. If I don't do it before the supply day on Thursday, that effectively will bump the next set of readings and discussions about this bill over into the week that is between the two break weeks, which will essentially leave our Senate colleagues no time to deal with this bill at all.

+-

    The Chair: Thank you.

    Are we dealing with the motion?

+-

    Mr. Derek Lee (Scarborough—Rouge River, Lib.): On a point of order, just to make sure, the parliamentary secretary referred to his reporting of the bill, but of course, the parliamentary secretary does not report the bill; the committee does, through the chair.

¿  +-(0945)  

+-

    The Chair: Thank you for that clarification.

+-

    Hon. John McKay: I appreciate the clarification.

+-

    The Chair: Monsieur Paquette, and then Mr. Thibault.

[Translation]

+-

    Mr. Pierre Paquette: I understand the parliamentary secretary's arguments very well, but this does not convince me that it is sound to put two different topics into the same bill, probably to force us to vote in favour of it. You are not fooling anyone, because in total, with the extension of the equalization formula and the transfer of $2 billion, $472 million of which would go to Quebec, we are still going to lose federal government transfer payments of close to $500 million this year, and $1.5 billion next year if we keep the same equalization formula. Thus, it is urgent that we amend that formula. We are not going to condone the fact that there have been no negotiations with the provinces, and none with Quebec, in particular.

    Personally, I would like to see two votes: one on the payment of the $2 billion, with which I agree entirely—I had even suggested that we make it a recurring payment—and another vote on the extension of the equalization formula. You know that there are 12 equalization payments. There is, thus, lots of time to come to an agreement with the provinces before the federal budget comes down, and, in particular, before the election.

[English]

+-

    The Chair: I'd like to get to the question.

    Mr. Thibault.

[Translation]

+-

    The Hon. Robert Thibault (West Nova, Lib.): I would first of all like to say to the Member for Joliette that I understand his reluctance to have two different items brought together for a single vote: he supports one, but hesitates to support the other. I understand his concerns very well, but I think that today's point should not pose any problems because it is not really an extension. It is simply an instrument to allow us to continue to make payments to the provinces while we negotiate the next agreement. The negotiations on a future equalization agreement retroactive to April 1 are something else. What we are talking about, here, is the financial stability of the provinces.

    There is a $100 million payment that goes to Nova Scotia, i.e. 20 per cent of the province's revenue, which will be suspended if we do not have such an instrument. That is why everyone was in agreement to hold broader and more in-depth discussions on the issue of equalization in general at some future date, so as not to mix up that topic with the matter of a simple instrument allowing us to continue to make payments to the provinces while negotiations are ongoing about a future agreement.

[English]

+-

    The Chair: Monsieur Paquette.

[Translation]

+-

    Mr. Pierre Paquette: I am happy to have heard what the member said, because I wanted to move an amendment to make the act retroactive when there is an agreement. As it is currently drafted, the act only mentions a simple one-year extension; no reference is made to any kind of retroactivity, even though Mr. Goodale, the Minister of Finance, talked about this, as Mr. Manley had before him. If we are all in agreement, this amendment should be passed without any problem by the committee.

[English]

+-

    Hon. John McKay: I stand corrected. But there is a retroactive provision in the bill to any new arrangements to April 1, 2004.

    An hon. member: Where?

+-

    Hon. John McKay: It's in clause 8, which says:

The definition “fiscal arrangements period” in subsection 1(1) of the Federal-Provincial Fiscal Arrangements Regulations, 1999 is replaced by the following: “fiscal arrangements period” means the period beginning on April 1, 1999 and ending on March 31, 2005.

    So the period extends to March 31, 2005.

+-

    The Chair: Are we ready for the question?

[Translation]

+-

    Mr. Pierre Paquette: I request a recorded vote, please.

[English]

+-

    The Chair: Yes, Pierre's motion.

    Do you want a recorded vote?

    An hon. member: We want a free vote.

    Some hon. members: Oh, oh!

    (Motion negatived: nays 9; yeas 2)

¿  +-(0950)  

+-

    The Chair: Now we'll go to clause-by-clause.

    With your permission, we can group some clauses, beginning with clauses 1 to 3.

[Translation]

+-

    Mr. Pierre Paquette: No. I am opposed to the inclusion of clause 3. I agree with grouping clauses 1 and 2, which will carry on division.

[English]

+-

    The Chair: Okay. I'll call the vote on clauses 1 and 2.

    (Clauses 1 and 2 agreed to on division)

    (Clause 3 agreed to)

    (On clause 4)

[Translation]

+-

    Mr. Pierre Paquette: I vote against clauses 1 and 2, but for clause 3.

[English]

+-

    The Chair: We have a proposed amendment to clause 4, but I'm told by the clerk it's out of order because it would require royal recommendation.

[Translation]

+-

    Mr. Pierre Paquette: I do want to mention that not only are we in favour of the $2 billion payment to the provinces, but that in addition we would have liked to see the committee recommend that this $2 billion be a recurring payment, and constitute a basis for negotiation for payments related to health. I was told that my amendment was out of order and so I will withdraw it. Notice could have been given to that effect. I withdraw the amendment.

[English]

+-

    The Chair: Okay.

    (Clause 4 agreed to)

+-

    Mr. Derek Lee: Mr. Chairman, there was a motion put and ruled out of order; therefore the motion has been dealt with. The member then purported to withdraw the motion, and just on a technical basis, in the event--

+-

    The Chair: No, no, we're dealing with the amendments, and the member is withdrawing his amendment because it's....

+-

    Mr. Derek Lee: The amendment was ruled out of order. If it's ruled out of order, it's disposed of. I'm only saying this in the event, Mr. Chairman, the House wishes to look at this later.

+-

    The Chair: Okay, that's fine.

    (Clauses 5 and 6 agreed to on division)

    (Clause 7 agreed to)

[Translation]

+-

    Mr. Pierre Paquette: I have an amendment. Later? Are you sure?

[English]

+-

    The Chair: It's a new clause, Monsieur Paquette, your amendment.

[Translation]

+-

    Mr. Pierre Paquette: It is 7.1, and that is why I thought it was part of clause 7. I see. In that case, I am not in favour of clause 7.

[English]

+-

    The Chair: Okay. Monsieur Paquette.

[Translation]

+-

    Mr. Pierre Paquette: Thank you, Mr. Chairman.

    My amendment's purpose is precisely to clear up the retroactivity issue. I move that we add, after clause 7, clause 7.1, which reads as follows:

7.1 For greater certainty, an agreement in respect of fiscal equalization payments entered into between the Government of Canada and the government of each province after March 31, 2004 takes effect on April 1, 2004.

    The point is that we want retroactivity to apply, and we do not want negotiations to drag on endlessly. As for the bill, it is obvious that it talks about extending the formula as it stands, quite simply.

    The provincial premiers will probably be asking for retroactivity. The government side has often expressed its openness to the idea. Mr. Goodale repeated at least twice that it would be retroactive. If everyone agrees, I do not see why it would not be included in the bill.

[English]

+-

    The Chair: Monsieur Thibault.

[Translation]

+-

    The Hon. Robert Thibault: Although I agree with the principle, I would like to ask departmental officials for clarification. There may be a risk involved in including this in the bill.

    Firstly, it is possible that pursuant to the wishes expressed by the provinces, the agreement negotiated with them will not include that. The agreement may also include significant reductions for certain provinces during the first years and increased funding for subsequent years. We do not know what this agreement will contain. If this were the case, retroactivity could have an adverse effect on those provinces.

    It could be important, as negotiations between the provinces and the federal government evolve, to maintain this openness with regard to those negotiations. In that way, when the agreement has been reached, this committee will have the opportunity of studying it.

¿  +-(0955)  

[English]

+-

    The Chair: Monsieur Paquette.

[Translation]

+-

    Mr. Pierre Paquette: Mr. Chairman, the bill as it stands currently puts no pressure on the federal government to have the matter resolved before next year. There have been no serious equalization negotiation for months now. It is the first time that such a bill proves necessary. Up till now, equalization formula agreements were always reached before March 31st, preceding the end of the agreement.

    Without retroactivity, the government only has to drag things out until next year; it could even introduce another bill to extend the formula for a second year. Consequently, I feel that we need this equalization formula. Afterwards, as Mr. Thibault was saying, should other arrangements be put forward, they would in any case have to be submitted to Parliament for a vote. Moreover, if the agreement did not contain any retroactivity provisions, we would be in a position to make adjustments through the new Equalization Act.

    I think that the Canadian government and Parliament must send a signal indicating that they do not intend to drag out the equalization negotiations endlessly. May I remind you that this year, Quebec has lost half a billion dollars and next year it will have lost a billion and a half dollars. I want to ensure that we can recover that billion and a half when these negotiations are over.

[English]

+-

    The Chair: Mr. McKay.

+-

    Hon. John McKay: Mr. Paquette's motion is based upon a false assumption that these equalization payments are made pursuant to a federal-provincial agreement. In fact, they're made pursuant to an act of Parliament, and it's Parliament's prerogative, with respect to these equalization payments. So you would be circumscribing the ability of Parliament to respond on equalization claims. That's number one. So his motion is completely flawed in that respect.

    Before I call on legal counsel to deal with the intent of the motion, I also want to point out--as I did yesterday--that these negotiations have carried on virtually continuously from day one. They're extraordinarily complex, and I'm told that since 1999 federal and provincial officials have met 47 times, not including various working group sessions. To say that somehow or other this is just being sprung on provincial authorities at this stage is simply to mislead the committee.

    I don't think Mr. Paquette would intentionally mislead the committee over something of that nature. These are negotiations that carry on virtually continuously. They're extraordinarily complex. But this is not made pursuant to a federal-provincial agreement.

    On the second point I have.... Clare, could you make your point as well, please?

[Translation]

+-

    Ms. Clare Scullion (Counsel, General Legal Services Division, Department of Finance): If the purpose of the amendment was to ensure that the bill be retroactive in future, an amendment would be unnecessary because the Interpretation Act says that it is understood that Parliament can always repeal or amend any act. So even if Parliament included such a provision in the bill at this time, it would not necessarily mean anything. The government stated yesterday that its intent was that the bill, in future, for the five-year renewal, be retroactive to April 1, 2004.

+-

    The Chair: Mr. Paquette.

+-

    Mr. Pierre Paquette: I agree completely with that argument. When the Act respecting Equalization comes before Parliament, we can adjust the rules. It seems to me that insofar as Bill C-18 is concerned, Parliament must tell the government that it wants this to be settled quickly. The proof is that the legislation will be retroactive. So there is no benefit in dragging things out needlessly.

    I believe we should include it. As Mr. Thibault was saying and as Ms. Scullion just said, I am aware that once there is an agreement with the provinces, a new bill will be put before Parliament, one which could take into account all of the agreements with the provinces. A signal is being given.

    That said, I know that the parliamentary secretary may not be in favour of this, but Mr. Goodale said at least twice that this would be done .

[English]

+-

    The Chair: Thank you very much.

    (Amendment negatived: nays 10; yeas 1)

    (Clause 8 agreed to on division)

À  -(1000)  

-

    The Chair: Shall the bill pass?

    Some hon. members: Agreed.

    Some hon. members: On division.

    The Chair: Shall the chair report the bill to the House?

    Some hon. members: Agreed.

    The Chair: C'est tout. Thank you.

    The meeting is adjourned. Thank you, ladies and gentlemen.